What to Expect from Washington B&O Tax Increases

Washington state is raising the business and occupation (B&O) tax. There will be two increases:

• 75% will increase to 2.1% on October 1, 2025
• 1% will increase to 2.35% on January 1, 2026

Here’s what your groups can expect because of the tax increase:

• Fully insured dental groups: renewal calculation will reflect the adjusted B&O tax
• OptiFlex groups: administrative fee is impacted and will be considered when setting renewal
• Self-funded groups: administrative fee is impacted and will be considered when setting renewal
  • This includes groups in a multi-year guarantee. Adjusting due to tax increases is supported by our self-funded contract with the group.
  • B&O tax applies only to subscribers in Washington state.
    • Groups who only have employees in Washington state, will see an impact around +0.6% increase in admin fees.
    • Groups with high out-of-state enrollment, the impact is lower as a percent of the total administrative fee.
  • Groups with effective dates prior to and including September 1, 2025, effective dates won’t have their administrative fee adjusted mid-contract year for the increases in tax.  However, at renewal, starting with October 1, 2025, effective dates, the increase in B&O tax for the upcoming contract year will be calculated for and included in the administrative fee renewal.
  • B&O tax also applies to pharmacy rebates that are passed through. Taxes will be withheld from pharmacy rebates.

Contact your Premera account representative for more information.